Rockwell gets through a tough quarter with support from key shareholders and outlines future plans following recent Bondeo 140 cc acquisition.

Transcription

1 Rckwell gets thrugh a tugh quarter with supprt frm key sharehlders and utlines future plans fllwing recent Bnde 140 cc acquisitin. July 14, 2015, Jhannesburg, Suth Africa -- Rckwell Diamnds Inc. ("Rckwell" r the "Cmpany") (TSX:RDI; JSE:RDI) annunces results fr the three mnths ended May 31, Currency values are presented in Canadian dllars, unless therwise indicated. FINANCIAL HIGHLIGHTS Q1 F2016 Q1 F2015 % Change Q4 F2015 F2015 Ttal revenue ($m) (39) Rugh diamnd sales ($m) (14) Beneficiatin revenue ($m) (83) Average price per carat sld (US$) 1,432 1, ,544 1,345 Grss prfit / (lss) befre amrtizatin and depreciatin ($m) (3.1) (3.1) (0.8) Average cash perating cst / m 3 (US$) (1) Cash generated / (used) in peratins (5.0) Lss attributable t wners f the parent ($m) (65.1) (8.2) (14.0) Net Cash and cash equivalents ($m) (1,299) (1,453) Salient features Rckwell entered a transitin phase in the first quarter and tk the decisins t suspend peratins at Niewejaarskraal ( NJK ) pending review f the gelgical mdel and plant, t sell its interest in Tirisan and t buy Remhgte, all f which were cmpleted. Operating results reflect the transitin, reprting with a net lss f ($5.1 millin), after impact f nn-recurring expenses ttalling $4.9 millin. First quarter revenue dwn 39%, as diamnd sales were impacted by lwer prductin at NJK and Saxendrift Hill Cmplex ( SHC ) and the Tirisan dispsal. Beneficiatin drpped year n year as the prir-year revenue was skewed by the sale f an exceptinal 109-carat plished diamnd. Average cash csts declined marginally t US$13.09 per m 3 ntwithstanding lwer vlumes prcessed by MOR peratins (dwn 14%), The acquisitin f Remhgte/Hlslt Prject ( RS/HS ) and its assciated plant and equipment ( the acquisitin ) in Middle Orange River ( MOR ) was cmpleted and Rckwell assumed perating cntrl n

2 May 28, Grades and vlumes achieved have been n plan fr the first fur weeks f peratin, subsequent t the date f change f cntrl. A financing is planned t raise bth equity and asset funding in Q2 t repay the US$ 16.5 millin plus ZAR 16 millin bridging lans frm tw sharehlders, Asct Diamnds (Prprietary) Limited and Rckwell Chairman Mark Bristw, that facilitated the clsing f the acquisitin. Cash generated by the new peratins have enabled repayment f ZAR 16 millin the bridge lans during June and July. Onging fcus n delivering medium term strategic target t prcess 500,000m 3 f gravels per mnth frm MOR peratins, and rebuilding prductin prfile t achieve sustainable prfitability: Ratinalizatin f existing MOR peratins is currently underway with redeplyment f certain assets t the acquired peratins. Review f the mine plan at Niewejaarskraal t avid stripping csts experienced t date. Medium-term plans als include explratin at Lanynvale and large-scale bulk sampling at Wuterspan with a view t replacing Saxendrift as it appraches the end f its ecnmic life and t deliver additinal rganic grwth. Cmmenting n the first quarter financial perfrmance, James Campbell, CEO and President said: Rckwell has cme thrugh a challenging first quarter as we dealt with sme final legacy issues and ratinalized ur wn peratins which have been struggling with declining grades. Having sld Tirisan, suspended peratins at Niewejaarskraal and clsed Saxendrift Hill Cmplex, the cmpletin f the Bnde acquisitin delivers a suite f lnger life ptins including the flagship Remhgte/Hlslt peratins. With these assets and ur wn Wuterspan and Lanynvale feasibility and explratin prjects we are nw able t lk t the future and deliver n ur medium term bjectives f building a sustainably prfitable and integrated diamnd business. Financial review: Revenue: Grss rugh diamnd revenues were $9.2 millin (2014: $15.1 millin), a 39% decrease ver last year, due t lwer beneficiatin revenue ($4.5 millin) and a decrease in cntractr sales at Tirisan ($1.7 millin), MOR carats sld were n a par with the prir year. Prductin Csts: Prductin csts decreased frm $ 11.3 millin last year t $10.9 millin in the current perid, reflecting lwer csts due t the suspensin f activities at NJK and SHC. The impact f these suspensins was a reductin in cst f $3.2 millin cmpared with Q1 2015, net f nn-recurring clsure csts f $0.9 millin. Csts at Saxendrift increased by $3.5 millin, hwever, due t increased mining activity brught n by higher levels f waste stripping. On a unit basis the average cash cst fr all the peratins fr Q1 F2016, amunted t US$13.09 per cubic metre prcessed. Cst f sales befre amrtizatin and depreciatin increased t $12.3 millin wing t the changes in prductin csts mentined abve and the value f gds sld frm stck.

3 Grss (lss) prfit befre amrtizatin and depreciatin: A grss lss befre depreciatin and amrtisatin f $3.1 millin was reprted by the Grup fr Q1 2016, which cmpares t a prfit f $4.3 millin fr Q This is largely driven by nn-recurring perating lsses at NJK and SHC f $2.7 millin and higher stripping ratis at Saxendrift. Nn-recurring incme statement impacts: Operating results reflect the current transitin f the business with a net lss f ($5.1 millin), which included the nn-recurring incme statement impacts f business decisins, fr a ttal f $4.9 millin frm: Operating lsses at NJK and SHC f $2.7 millin (including ne time restructuring and redundancy csts f $0.9 millin); Business develpment acquisitin transactin csts f $0.4 millin; and A write dwn f Tirisan f $1.8 millin, fllwing sale f the asset. Cashflws: The grup utilised cash flw in peratins f $5.0 millin (Q1 F2015: $1.1 millin generated), largely due t the trading utcme mentined abve and funding the transitin csts related t clsures and the Acquisitin. Net cash psitin: At May 31, 2015 the Grup had an verdraft f $1.3 millin (Q1 F2015: verdraft f $1.5 millin), having recrded a net cash utflw f $2.7 millin. Market update The first quarter was characterized by a cntinued slwdwn in rugh purchases and plished price stabilizatin largely due t the lwer vlumes traded. Althugh finance remains tight, there has been a slight imprvement in finance available. At De Beers tw sights held during the quarter, prices were dwn sme 5% t 7% and vlumes were greatly reduced. The rejectin rate by sight-hlders was up t 30%, largely due t minimal margin n sight gds and the unavailability f finance. Alrsa als reduced their prices and lwered vlumes in line with market demand and resistance t paying high prices. Other prducers, the majrity selling via tender prcess, saw prices stabilizing in the secnd quarter f calendar year with steady tender demand. Players in the plished diamnd market cntinued their attempts t reduce inventry and imprve liquidity. Prices stabilized and while plished is still plentiful, shrtages f certain mre desirable items are emerging. Factries, have adjusted their wrkfrce rather than plishing the expensive rugh at a lss. Lking frward, a cntinued reductin in rugh supply and lwer prices culd sustain plished prices and stabilize the disparity between rugh and plished prices. As the seasnally slw nrthern hemisphere summer trade des slw dwn, plished cnsumptin will fllw suite, and thus there is n expectatin f price increases. Outlk

4 Having cmpleted the acquisitin, Rckwell s fcus is nw n rebuilding its prductin prfile and delivering further grwth pprtunities frm its prject pipeline as well as new business pprtunities. Rckwell expects t steadily ramp up RH/HS thrughput and further ratinalize the varius prcessing plants int ne peratinal structure by August Expansin plans als include cnstructing an in field screen t increase mnthly vlumes t 200,000m 3. Prductin frm the RH/HS Prject prvides Rckwell with headrm t ratinalize its existing peratins, redeplying assets t newly acquired peratins and expediting wrk n develpment prjects. In the medium term, the Cmpany will retire thse mines that are reaching the end f their ecnmic lives, including Saxendrift, mving existing plant and EMV assets t build new peratins at fresh resurces frm the Cmpany s prject pipeline. Its explratin pririties are t cmplete gelgical mapping at Lanynvale and mre twards bulk sampling and at Wuterspan, the gal is t cmmence bulk sampling after cmpleting the feasibility studies. Bth are cnsidered t have significant ptential t add t the Cmpany s resurces. The Cmpany als cntinues t evaluate new prjects and value accretive cnslidatin pprtunities t meet its strategy t becme a mid tier diamnd prducer. Cnference Call: Rckwell will hst a telephne cnference call n July 15, 2015 at 09:00 a.m. Eastern Time (15:00 p.m. Jhannesburg / 14:00 p.m. Lndn) t discuss these results. The cnference call may be accessed as fllws: Cuntry Access Number Canada and USA (Tll-Free) Suth Africa (Tll-Free) Suth Africa Jhannesburg Suth Africa Cape Twn UK (Tll-Free) Other Cuntries (Intl Tll) Other cuntries Alternate A transcript f the audi webcast will be available n the Cmpany's website:. The cnference call will be archived fr later playback until midnight (ET) July 18, 2015 and can be accessed by dialling the relevant number in the table belw and using the pass cde 38031#. Cuntry Access Number Suth Africa (Telkm) Canada and USA (Tll Free)

5 Other Cuntries (Intl Tll) UK (Tll-Free) Fr further details, see Rckwell s cmplete financial results and Management Discussin and Analysis psted n the website and n the Cmpany's prfile at These include additinal details n prductin, sales and revenues fr the quarter, as well as cmparative results fr fiscal 2014 Fr further infrmatin n Rckwell and its peratins in Suth Africa, please cntact James Campbell CEO +27 (0) Stéphanie Leclercq Investr Relatins +27 (0) David Tsi PSG Capital JSE Spnsr +27 (0) Abut Rckwell Diamnds: Rckwell is engaged in the business f perating and develping alluvial diamnd depsits, with a gal t becme a mid-tier diamnd prductin cmpany. Rckwell als has a develpment prject and a pipeline f earlier stage prperties with future develpment ptential. The peratins are based n a strategy f thrughput prcessing and technlgy. Rckwell cntinuusly strives t be the lwest cst prducer in the industry. The Cmpany is knwn fr prducing large, high quality gemstne cmprising a majr prtin f its diamnd recveries that is enhanced thrugh a beneficiatin jint venture that enables it t participate in the prfits n the sale f the plished diamnds. Rckwell als evaluates cnslidatin pprtunities which have the ptential t expand its mineral resurces and prductin prfile and t prvide accretive value t the Cmpany. Rckwell s cmmn shares trade n the Trnt Stck Exchange and the JSE Limited under the symbl RDI. N regulatry authrity has apprved r disapprved the infrmatin cntained in this news release. Frward Lking Statements Except fr statements f histrical fact, this news release cntains certain "frward-lking infrmatin" within the meaning f applicable securities law. Frward-lking infrmatin is frequently characterized by wrds such as "plan", "expect", "prject", "intend", "believe", "anticipate", "estimate" and ther similar wrds, r statements that certain events r cnditins "may" r "will" ccur. Althugh the Cmpany believes the expectatins expressed in such frward-lking statements are based n reasnable assumptins, such statements are nt guarantees f future perfrmance and actual results r develpments may differ materially frm thse in the frward-lking statements. Factrs that culd cause actual results t differ materially frm thse in frward-lking statements include uncertainties and csts related t the transactin and the ability f each party t satisfy the cnditins precedent in a timely manner r at all, explratin and develpment activities, such as thse related t determining whether mineral resurces exist n a prperty; uncertainties related t expected prductin rates, timing f prductin and cash and ttal csts f prductin and milling; uncertainties related t the ability t btain necessary licenses, permits, electricity, surface rights and title fr develpment

6 prjects; perating and technical difficulties in cnnectin with mining develpment activities; uncertainties related t the accuracy f ur mineral resurce estimates and ur estimates f future prductin and future cash and ttal csts f prductin and diminishing quantities r grades if mineral resurces; uncertainties related t unexpected judicial r regulatry prcedures r changes in, and the effects f, the laws, regulatins and gvernment plicies affecting ur mining peratins; changes in general ecnmic cnditins, the financial markets and the demand and market price fr mineral cmmdities such as diesel fuel, steel, cncrete, electricity, and ther frms f energy, mining equipment, and fluctuatins in exchange rates, particularly with respect t the value f the US dllar, Canadian dllar and Suth African Rand; changes in accunting plicies and methds that we use t reprt ur financial cnditin, including uncertainties assciated with critical accunting assumptins and estimates; envirnmental issues and liabilities assciated with mining and prcessing; geplitical uncertainty and plitical and ecnmic instability in cuntries in which we perate; and labur strikes, wrk stppages, r ther interruptins t, r difficulties in, the emplyment f labur in markets in which we perate ur mines, r envirnmental hazards, industrial accidents r ther events r ccurrences, including third party interference that interrupt peratin f ur mines r develpment prjects. Fr further infrmatin n Rckwell, Investrs shuld review Rckwell's hme jurisdictin filings that are available at